Deutsche Bank explains looking simply at manufacturing output in the developed world, global markets are now overvalued anywhere between 15% and 35%. This is the hope premium now embedded in stock prices…

In other words: all those bullish sell side research reports saying the world may get better in 2013, if it doesn’t get worse: they are all now priced in, and then some. If they don’t materialize, the downside is now clear.

So what’s going on? As Russolillo points out, some of the bullish sentiment is likely from the 2013 outlooks coming from sell-side analysts, which typically tend to be on the upbeat side. And even with its uptick, the BofA sentiment gauge is still near historic lows.

But it’s worth considering that — as the Vix is also telling us — investors and traders simply aren’t as spooked as the media coverage would have us believe. Whether that’s a good thing or not for the near- and medium-term future is another discussion (my crystal ball isn’t working properly right now).

About Stocks To Watch

Earnings reports, corporate strategies and analyst insights are all part of what moves stocks, and they’re all covered by the Stocks to Watch blog. We also look at macro issues, investor sentiments and hidden trends that are affecting the market. Stocks to Watch gives you the full picture of the U.S. stock markets, all day long.

The blog is written by Ben Levisohn, a former stock trader who has covered financial markets for the Wall Street Journal, Bloomberg and BusinessWeek.